Confused About Minimum Wages for Contract Workers? State vs. Central Rules Explained

After the last amendment in the Industrial Dispute Act, the appropriate Government in the case of a PSU became the Central Government. Accordingly, registration was done, and a license was obtained from the Central Labour Office. In the case of the Minimum Wages Act, there has been no amendment, so the definition of the appropriate government remains that of the state government. Does this mean that even with registration with the Central Labour Office, the wages to be paid to contract laborers will be those notified by the state government? Please advise/discuss.

I also need clarification. I am registered with the state government but have assigned staff to a PSU that is registered with the Central government. I feel the people are my employees, and since the work is carried out in my state, state government wages should be applicable. Am I right?

In a Public Sector Undertaking of the Central Government situated in any state, its workmen, if covered under the Minimum Wages Act of 1948, will be eligible for the minimum wages as per the central sphere, irrespective of whether they are employed directly, through an agent, or through a contractor. Employees include both staff and workmen under the Industrial Disputes Act. The Payment of Wages Act of 1936 applies to employees drawing wages up to a certain ceiling limit. If they are drawing wages beyond the ceiling limit, they have no remedy under the Payment of Wages Act of 1936. Am I correct or wrong?

In the Public Sector Undertaking of the Central Government, situated in any state, its workmen, if covered under the Minimum Wages Act of 1948, will be eligible for the minimum wages as per the central sphere, irrespective of whether they are employed directly, through an agent, or through a contractor. Employees include both staff and workmen under the ID Act. The Payment of Wages Act of 1936 applies to employees drawing wages up to a certain ceiling limit. If they are drawing wages beyond the ceiling limit, they have no remedy under the Payment of Wages Act of 1936. Am I correct or wrong?

Regards,
RL Dhingra, Advocate Labour Law Consultant, Delhi
[Email Removed For Privacy Reasons] [Phone Number Removed For Privacy Reasons]

Dear All, I second the answer given by Mr. Dhingra. Just to elaborate, the definition of Appropriate Government given under the Minimum Wages Act is as follows:

"Appropriate Government" means:
(i) in relation to any scheduled employment carried out by or under the authority of the Central Government or a railway administration, or in relation to a mine, oil-field, major port, or any corporation established by a Central Act, the Central Government, and
(ii) in relation to any other scheduled employment, the State Government.

According to the definition above, for any scheduled employment carried out by or under the authority of the Central Government, the appropriate government would be the Central Government. Therefore, the minimum wage of the Central Sphere would be applicable.

Scenario Analysis

Now, let's consider a scenario: a contractor not covered under the Contract Labour Act who pays all other employees minimum wages as per the state minimum wages. In this case, if the contractor's employees are working under a Central Government PSU, they would be entitled to the minimum wages of the Central Government. This is because they are working in an establishment under the authority of the Central Government, not just under the contractor. If state minimum wages were given, the principle of equal pay for equal work would apply, as others are receiving salaries based on the Minimum Wages of the center. It would be unfair to pay the contractor's employees less when they are in a similar position.

In my opinion, the employees should receive the Minimum Wages of the Center and not those of the state. However, if the state minimum wages are higher and you are already paying more, you cannot subsequently reduce the wages, as seen in the case of Delhi. New employees would be hired at the lower rates. Please feel free to reach out if you have any doubts.

Thank you.

Hi Kamal,

Thank you for the information. I just want to check if we are in the e-commerce sector and my warehouse is based within the airport jurisdiction in Delhi. As an airline, we are associated with the Airport Authority/DIAL. Which minimum wage will be applicable for our contractual staff working within the airport jurisdiction?